Planning and Supervision

Question 1

Identify three planning-related issues that should be included in the auditor’s documentation.

Answer 1

1. )The overall audit strategy
2. )The audit plan
3. )Any significant changes made to the audit strategy or the audit plan during the engagement, along with the reasons for any such changes

Question 2

List several circumstances that impact the extent of planning activities.

Answer 2

1. )Size and complexity of the entity
2. )Auditor’s experience with that entity
3. )Auditor’s understanding of the entity and its environment, including its internal control

Question 3

What is the difference between an overall audit strategy and an audit plan?

Answer 3

An audit strategy deals with higher-level issues, such as allocating audit resources, whereas an audit plan is more detailed and deals more specifically with the nature, timing, and extent of audit procedures to be performed.

Question 4

List the audit procedures that should occur during the planning phase of an audit.

Answer 4

1. )Review client records.
2. )Make inquires of client personnel.
3. )Coordinate client assistance.
4. )Determine if specialists are needed.
5. )Coordinate staffing requirements.

Question 5

Identify some activities associated with pre-engagement activities.

Answer 5

1. )Perform appropriate procedures to address the quality control issues associated with the acceptance/continuance of the audit engagement.
2. )Evaluate the audit team’s compliance with relevant ethical requirements (especially independence issues).
3. )Establish an understanding in writing of the terms of the engagement.

Question 6

Identify factors relevant to establishing an overall audit strategy.

Answer 6

1. )Identify characteristics of the engagement affecting its scope.
2. )Identify the reporting objective of the engagement and required communications.
3. )Consider the factors relevant to utilizing the audit team.
4. )Consider the results of preliminary engagement planning activities.
5. )Determine the nature, timing, and extent of necessary resources for the engagement.

Question 7

What is the auditor’s basic audit planning responsibility?

Answer 7

The auditor should plan the audit (and design the required written audit program or plan) to be responsive to the auditor’s assessment of the risk of material misstatement.